Data sharing

Trust will open new era for addressing cargo accumulation

Andrew Yeoman, CEO at Concirrus, says the “era of darkness” for marine cargo accumulations is now at an end, but the industry needs to take a leap of faith and embrace a new era of trust in sharing data

We cannot avoid the growing realisation that the global cargo market is set to become a far riskier place for insureds, insurers and reinsurers alike. As the world has emerged from the pandemic and its economic impact, global cargo flows have increased by 20% year on year and are expected to keep on a trajectory of rapid growth.

That growth comes against a background of more severe and frequent, natural and man-made catastrophes.

Hurricane Ian is estimated to have cost the marine market $5bn from losses across the US east coast, causing damage from high winds and storm surge. This is on top of continued pressures on the global supply chain.

But it is not only natural catastrophes we need to consider. The fire and explosion at the Port of Tianjin in 2015 cost marine underwriters more than $1bn, the explosion at the Port of Beirut is estimated at $3bn and the loss of the Felicity Ace and its cargo of high-end vehicles this year is estimated at $500m.

The Russian invasion of Ukraine has left many vessels trapped in the country’s ports, unable to leave and traverse the Black Sea due to the threat of indiscriminate sea mines and attack by the Russian Black Sea fleet.

UNDERSTANDING ACCUMULATION

What the events of the past five years have starkly illustrated is the need for insurers to get a real understanding of their cargo accumulation at any one time

in ports and on vessels across the world.

Despite such challenging times, there is good news for the industry. The technology and systems now exist which can access the information and data on cargo movements that can provide the ability for insureds and insurers to truly understand their cargo risks and the accumulations.

For the insured, such systems will enable them to better identify the risks they face, understand vulnerabilities in their supply chain, and deliver far more detailed data to insurers on which they can base their underwriting decisions.

In the past, the insurers have provided high-level information such as the turnover of the insured company, the typical value of cargo it has moved in the previous year and the company’s claims record.

That has fundamentally changed with insurers now able to access data on exactly what cargo was shipped, to where and when and via which routes. It enables the underwriter to identify risks, and accumulations on a real time basis.

For example, if the insured is shipping company critical machinery in five containers and all are transiting though the Port of New York, it creates the opportunity for the insurer to advise the insured that it should be potentially shipping the equipment through several ports to reduce the risk that the cargo will all be impacted by a single event.

Insurers are now able to access the data which will tell them their total accumulation risk across all insureds at a particular port, not only today, but how those accumulations are likely to change in the next week, next fortnight, or trend through time.

We now have the capabilities to enable the creation of a complete picture of exposures, and with it their aggregation risks. The days of ‘unknown accumulations’ are over.

That data is also likely to be demanded by reinsurers that may have 10 marine cargo insurers that are ceding risk and the reinsurers want to understand how that affects their aggregate exposure. However, to do so, trust will be key.

Technology and data have enabled the market to move out of the era of darkness and into a more enlightened era, but it will be one that will require trust. For the market to be able to build a full picture, it will require brokers, insurers and reinsurers to share the data which will enable the industry to better model their cargo risks.

The question I must ask is whether the technology and data companies can hand the issue of trust into the hands of the market, or whether they seek to solve the issue themselves.

While I would like to believe that the market can solve the issue of trust and data-sharing, we as a technology company can play a part.

CONFIDENTIAL COMPUTE

If we take the issue of the reinsurers seeking to access the accumulation risk data of its 10-cedents, there is now the capability to create what can best be described as a ‘confidential compute’. This can provide the reinsurer with the necessary aggregation data without the need for the reinsurers to access the cedents’ systems or information.

We can provide the data the reinsurers require to price the risk and manage their aggregations without the need to compromise the insurer and its data. The reinsurers simply want to know the size of the aggregation they have assumed and, with it, the exposures. They do not need to access the client’s granular data, which is bespoke to the insurer.

The market can ill afford to deal with the scale of losses it has faced in recent years. It needs to lower claims, but to do so, it needs to make better use of data throughout the transactional process.

The systems are in place to allow the data to be analysed and understood, but the sector must find a way to access the necessary data and it may well require those in the market to be willing to share data for the collective good.

We can understand that in an industry which has not operated in a system of shared data for centuries, it is a significant leap of faith. But this is where technology can play a part.

It will not only provide the potential for more accurate understanding of accumulation risk. The ability to access such data and better understand the risk can allow the industry to create innovative products which can better serve the needs of the insured or the cedent.

The key to making the most of what data and technology can now deliver will be the ability to trust.

Asia 27 April 2023

SINGAPORE

www.marineinsuranceasia.com

Thursday 27th June 2023, Singapore All Times in Singapore Time (SGT)

07:50 - 9:00 : Delegate Registration and Refreshments

08.05-08.55: BREAKFAST BRIEFING: A wounded tiger: how will China react to recent events?

In President’s Xi recent speech in Beijing, he made it clear that Taiwan remains firmly on his agenda, however in the last few months he has faced significant opposition internally. This session will ask whether a move on Taiwan might boost his government’s popularity and what the consequences might be. This session would also cover the recent Australian-Japan pact, which builds on the Aukus Pact of last year.

09.30-10.15: PANEL DISCUSSION: Why Insure in Singapore?

This session, consisting of shipowners, brokers and insurers looks at what Singapore does best, as well as looking at what is happening in other global marine hubs. It has been reported that economies in the Asia-Pacific will dominate global growth in the coming year (S&P Global Market Intelligence). How well is the Singapore marine insurance market placed to fully take advantage of these favoured conditions?

Panellists: Chris Coupland, Head of Marine Singapore, Marsh

10.15-10.45: PRESENTATION: Boom and Bust: The Shipping Cycle

Container rates have been fluctuating wildly since the onset of Covid-19. What is the impact of that on insurance rates? This session asks how insurers can properly rate vessels and ensure clients avoid either over- or under-insurance. The aftermath of Covid has left the marine workforce dilapidated with a lot of seasoned talent seeking non-marine professions. This coupled with the trauma seafarers have found themselves with has raised questions on the safe working culture prevalent on vessels, this is evident with an upswing in crew illness/injury incidents. How can insurers contribute towards improving seafarers wellbeing?

Presenter: Captain Hari Subramaniam, Regional Head- Business Relations, Shipowners Club

13.40-14.00: PRESENTATION: Fueling Future Ships

Ammonia is frequently mentioned as a possible future fuel for vessels, along with several other options, including nuclear. However, there will still be plenty of vessels running on oil in Asian waters for many years ahead. How will the insurance market approach rating for different fuel types?

14.00-14.30: FIRESIDE CHAT: Going Green on Shipping Lanes

Increasing numbers of territories are looking at developing green corridors for vessels, including Singapore. This session asks how these will function and what it could mean for insurance of vessels that use them…or that can’t use them.

14.30-15.00: NETWORKING BREAK

10.45-11.15: NETWORKING BREAK

11.15-11.45: PRESENTATION: The True Cost of Claims

In this session we take a couple of ‘mundane’ small claims and explore how they were handled and what the final tally was. We explore whether the claims process could be improved and how to avoid too many of these small claims mounting up.

12.00-12.45: PANEL DISCUSSION: How Recent Political Conflicts are Changing the Marine Insurance Landscape

This session will discuss the current implications of global conflict and what lessons can be taken away from current events and applied to any potential conflict in the South China Sea and Korean sub continent.

12.30-13.20: LUNCH BREAK AND NETWORKING 13.20-13.40: PRESENTATION: Crew Claims & Supporting Seafarers

15.00-15.45: PANEL DISCUSSION: Ablaze at Sea!

According to the Allianz Safety & Shipping Review, there were 54 total losses in 2022 compared with 65 in 2021 against a backdrop of a 57% decline over the last 10 years. However, fires on large vessels remain a major concern with the cause regularly being attributed to lithium batteries and undeclared dangerous cargo. What can insurers do to mitigate their risks, or is it simply out of their hands?

15.20-16.00: PANEL DISCUSSION: Nurdling Along: Cleaning Up New Forms of Pollution

New forms of pollution are clogging up the sea waters across the world, with plastic nurdles among the greatest concerns. This session addresses the challenges of collecting this tiny debris and asks whether the insurance market is keeping up to speed with the changing nature of debris.

16.00-16.45: PANEL DISCUSSION: What’s the Future for Salvage?

Last year, Lloyd’s decided in favour of keeping the Lloyds Arbitration Branch, but what does that mean for the future of the LOF form in Asia? In this session, we examine the findings of the Asia Working Group and ask how the LOF can be successfully promoted and used in an Asian context.